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The Tantalizing Promise of Promise Zones

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On Thursday, January 9, President Obama spoke about how he plans to address challenges such as job creation, housing, law enforcement and education in the poorest communities. The speech set the tone for his remaining tenure and came almost 50 years to the day that President Lyndon Johnson announced his War on Poverty.

Obama proposed tax and regulatory-relief incentives in federally-sanctioned Promise Zones as a means of attracting capital and industry to poverty areas, including Indian reservations. This approach was pushed in the 1980s as Enterprise Zones by then-Congressman Jack Kemp (R-NY), but legislation was never enacted to make it a reality. Later the concept was bandied about and half-heartedly tried in the Clinton Administration as Empowerment Zones.

It appears to me that the Democrats’ names for such zones try to suggest something softer or more compassionate than the toughness and challenge inherent in terms like enterprise or capitalism. Thus the promise and potential of these zones lose their appeal and marketability in domestic and global economies. Instead of enterprise zones we get almost-pampering terminology like empowerment zones and promise zones.

Development is difficult and tribes need to be aware of the challenges and have plans that would offer more than federally-granted tax relief to prospective capital and businesses to lure them to the reservations.

In the 1980s the Charles Trimble Company did several studies on tax- and regulatory-relief incentives to attract capital and industry to Indian reservations. These included Foreign Trade Zones, Mexico’s maquiladoras and other concepts of duty-free manufacturing to attract foreign and U.S. companies to utilize the zones to manufacture or assemble products on Indian reservations.

We were convinced that such a concept could work for Indian reservations, and we testified for passage of legislation, or inclusion of Indian reservations in Enterprise Zone legislation that was already in the Congressional hopper.

But in our studies we also learned that it wasn’t all that simple – there is no magic in tax incentives. In meetings with executives of major corporations we did a simple survey in which we listed various factors and asked them to prioritize the influence of each factor on a decision to locate a factory at any particular area. They listed things like markets, infrastructure, transportation and municipal services (e.g. security and waste management) as high in their considerations. Especially high in priority was the availability of a motivated and job-ready workforce. Tax incentives, however, were not high in their priorities. Such incentives, they said, might tip the scale if two equally attractive prospects were in contention.

The absence of most of these priority factors are immediate disincentives for businesses that might consider moving to a reservation; but the biggest problem is the work force factor. We got an appreciation of this problem later when we did an economic base analysis for a tribe in the northern plains.

This tribe was led for many years by a very effective Chairman. Several factories filled the tribe’s industrial park, including one with large defense contracts, and jobs were plentiful. The tribe’s Chairman had done creative marketing to attract those industries; including assuring them that the tribe would help offset early losses due to training needs and labor force stabilization.

We interviewed executives of those Reservation factories and learned that their first few years of operation had employee turnover rates as high as 200%, with much absenteeism. But the patience asked of them by the tribe’s Chairman ultimately paid off with a stable work force in the factories.

However, this reflected a situation that plagues many tribes in their economic development efforts, whether it is a local tribal initiative or an outside industry: an unmotivated and undependable work force – in short, lack of a work ethic.

Many of our people have become dependent on the federal and tribal governments to provide the necessities of life. It is a fact that much of this results from a century of Indian policy in which the federal government assumed an overly protective—even stifling—role as trustee, and viewed the role of the tribes and their members as that of incompetent wards. This was done not just for fiduciary reasons but more as a means of keeping Indians under their control. The results were lack of economic development and wholesale dependency.

As to attracting industry, it is a very difficult thing, even with generous incentives. And as we also learned in our work, we should not expect big business to do anything out of a sense of altruism. Doing good means little to them, unless by doing good they can make money in the process. They are quick to tell you that their business is that of making money, and not giving it away. To the contrary, any altruism on their part is often to cover sleazy motives. In our studies we found that several manufacturing businesses offered to tribes by large corporations were actually businesses that were failing and were being dumped on unwary tribes that were desperate for jobs, and thus vulnerable to such chicanery.

Once again, the challenge comes back to the tribes and Indian leaders.

It does Indian country no good to have the answers to our economic problems over-simplified as only a lack of government assistance or legislated incentives. And it doesn’t do us any good to blame others—our federal trustee or greedy big business. We must take it upon ourselves to correct the deficiencies and disincentives in our tribal communities.

And finally, we don’t need assuaging our feelings with excuses for our deficiencies. It might be said that our people on the reservations are choosing preservation of traditional Indian ways and rejection of white man’s ways, and other excuses and shibboleths scholars and other apologists use to patronize Indian people.

If our tribal leaders don’t take action to address these in-house issues, no tax relief, duty relief or regulatory relief can help. And no one in the public or private sectors is going to help any tribe that won’t take basic steps to help itself and its own people.

Charles “Chuck” Trimble is a member of the Oglala Lakota Oyate, born and raised on the Pine Ridge Indian Reservation. He was principal founder of the American Indian Press Association in 1970, and served as Executive Director of the National Congress of American Indians from 1972-1978.

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